California pushes for auto insurance reimbursement checks amid reduction in driving during pandemic

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Three auto insurance companies in California are under increased pressure from the state to issue auto insurance reimbursements due to lack of driving during the pandemic. (iStock)

California Takes Action Against Three Auto Insurance Companies, ordering them to repay their drivers for the premiums billed to them at the start of the pandemic.

The three companies in question include Allstate Northbook Indemnity, Mercury Insurance and CSAA Insurance Exchange, which provide insurance to about 20% of California drivers, according to an Oct. 6 press release from the state Department of Insurance.

Analysis of the data by the ministry showed that these companies had the largest gap between what they initially reimbursed to drivers and what the ministry said they should have reimbursed.

“Last year, as the pandemic struck, millions of Californians stayed at home to save lives,” California Insurance Commissioner Ricardo Lara said in a statement. “We drove less, reducing the risk for other drivers on the road. And because of that, I ordered the insurance companies to reimburse the drivers. New data shows that these three insurance companies have the greater gap between what they did and what they should have done to provide additional premium relief to their policyholders. ”

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Heads of State say “lack of patience” with insurers

Last year, during the COVID-19 pandemic, California auto insurance companies reimbursed more than $ 2.4 billion in premium relief to drivers – which was the most beneficial of any other state. United, according to the press release. But despite this, Lara said the contributions from the three companies he spoke to were not enough.

“On behalf of consumers, I have run out of patience,” Lara said. “These insurance companies have 30 days to tell us once and for all how they are going to fare before we take any further action.”

The ministry found that from March to September 2020, insurance groups made adjustments and returned an average of 9% in auto insurance reimbursements after Lara ordered “appropriate reimbursements” to be made to all drivers. However, in March 2021, the department said its data showed 17% of premiums should have been paid as relief payments due to the dramatic drop in risk of loss for insurance companies.

“During the pandemic, Californians drove much less but continued to pay auto insurance premiums before the pandemic. Insurance companies are keeping an unearned windfall captured during an unprecedented crisis, and they must return the ‘surplus they collected after COVID changed everything. “Douglas Heller, insurance expert for the Consumer Federation of America, said. “We appreciate Commissioner Lara’s persistence in holding insurance companies to account and in fighting to recover money from policyholders.”

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California will continue to analyze reimbursement data

The state has given the three auto insurance companies 30 days from its Oct.5 order to respond. But Lara says it won’t end there, as the state will continue to analyze new data as it becomes available to see if it thinks more consumers should be relieved.

“While some insurance companies have provided some relief, our service will continue to research and analyze data to make sure all insurance companies are following my orders,” said Lara. “Protecting consumers is my top priority. We will use all means at our disposal to hold insurance companies accountable for their actions during the pandemic.”

Earlier this year, Lara also insurance companies ordered to continue to provide “appropriate premium refunds or credits”.

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